Alun Cairns: It is a privilege to speak in support of this Bill and to have the opportunity to support many of the calls that colleagues have made.
Only just over a week ago, the Minister and I were in Westminster Hall debating an allied subject to this Bill when we discussed the challenges and opportunities that came from excluding Huawei from our 5G network. I do not want to repeat all the points that were made in that debate, but in the short time since then, the Government have taken significant, welcome steps—something the Minister hinted at—in developing policies associated with the Bill. Today’s publication of the 5G supply chain diversification strategy sees a welcome plan that contributes to the solution that Huawei brought about, as does the neutral RAN pilot that was announced earlier today.
As a backdrop, it is worth recalling that it was the lack of diversity in the supply chain of this specialised area of technology that created a tension between the desire to roll out 5G as quickly as possible and the potential exposure of our national security to high-risk vendors. Among a whole range of factors, we were being forced to weigh up, or were tempted by, the economic and social benefits that 5G could bring within a relatively short timescale against the risks of being exposed to largely one company with its umbilical cord attached to one nation and the potential security risks associated with that country—obviously, China.
The Government ultimately, and rightly, decided that the concern for the latter outweighed the former, and this Bill is the result. That is welcome, but simply passing the Bill will not necessarily reduce the risks if we continue to be exposed to a limited number of vendors. That is why the diversification strategy and the neutral RAN pilot are also important. It is worth highlighting that in any vital supply chain, diversity is key, but a few organisations in the commercial world allow supply chains to become too constrained. The commercial risks, let alone the security risks, are far too great.
It is worth recognising that the reach and influence of 5G will be far greater than any previous generation of communications. Its capacity to carry much larger volumes of data at very high speeds well beyond 400 Gbps capacity means that our connected lives will be taken to a whole new level. Some have mentioned the internet of things, connected vehicles, smart cities and even smart energy networks, and many more areas that we have not even thought of will become connected in an ever greater, independent way, highlighting the risks that we could have faced if this Bill had not been brought forward. However, all these innovations lead to an exponential growth in connectivity and pressures on spectrum that has its natural limits, which also need to be overcome. Smart cell technology is likely to be part of the solution, meaning that more apparatus than ever before will need to be adopted, along with a greater dependence on the fibre networks that will take it from the small cells. However, this also highlights the need for quantum encryption—something I will come to later, because it is not included in the strategy plan that the Minister published earlier today.
It is therefore obvious that alternative suppliers need to be developed, not only because of the risks we are considering but because of the unprecedented demand for equipment needed to deliver the connectivity that will be called for. There is significant value in this—in the research and development, in the intellectual property and in the manufacturing opportunities, all of which need to be exploited. A fundamental turning point for me was during the summer, when the Government announced their intention to adopt open standards such as open RAN. This signalled that the Government understand the challenges, and the need to encourage more investment and innovation in this space. This was a hugely welcome step, and will be pivotal to diversification in the marketplace. Furthermore, today’s neutral RAN pilot project shows that the Government are determined to be at the forefront of the technological advances.
I would add that we need to ensure these pilots are particularly open—very open—to UK businesses. In last week’s debate, I went into detail to highlight the many individual companies that show the UK has exceptional expertise in specific areas, such as radio frequency and satellite communications, base station capability, backhaul and cyber-resilience. I went through a whole list of organisations in last week’s Westminster Hall debate; I will not go through them again, but I will just highlight a few.
Many right hon. and hon. Members have referred to cyber risk, but south-east Wales and the western gateway have among the greatest cyber-resilience expertise anywhere, certainly in Europe: Thales, Airbus, and quantum technology at the University of Bristol, along with GCHQ. It also happens to coincide with the disproportionate strength that south-east Wales has in compound semiconductors, which I will come on to in a moment, and the satellite and radio frequency expertise that exists in north-east England, highlighting that this coincides with the levelling-up agenda that the Government also want to pursue. Today’s Bill will lead to new economic opportunities in different parts of the country.
Enabling the technology through all these elements is a great economic opportunity. 5G will only work with the compound semiconductor technology that I mentioned earlier—high-capacity chips that enable more data to be managed effectively. I said last week that if a silicon chip is a country lane, compound semi-conductors are great big highways: that is the volume of data that will be carried by the 5G network. The world’s largest cluster for compound semiconductor technology is in south-east Wales, part of the western gateway economic region. Companies such as IQE, SPTS Technologies, Newport Wafer Fab and others work with the Compound Semiconductor Applications Catapult, as well as universities from Cardiff and Swansea to Cambridge and Bristol.
It is worth noting that the UK has great expertise in silicon chip design, but we do not manufacture such chips any longer. In contrast, we design and fabricate compound semi-conductor chips, so supporting and encouraging further investment in this sector can maintain manufacturing capacity as well. Their energy efficiency is also a key benefit, particularly with technology consuming 2% to 3% of global energy demand.
Finally, I mentioned quantum encryption earlier. So much more use will be made of fibre technology as part of the small cell element of the 5G roll-out. Quantum  encryption is vital if we are going to maintain our defences against the cyber threat that so many colleagues have talked about.
It is a privilege to support this Bill. There are so many elements that must coincide and go along with it, and I am glad that the Minister is taking large leaps in the right direction.

Matt Warman: We do not anticipate legislation as a direct result of the diversification strategy, but of course there are other important avenues to explore as part of the broader industrial strategy. A lot of what is in the diversification strategy does not need to be delayed by the legislative programme, and I think my right hon. Friend would welcome that.
A number of Members raised the role of Ofcom. Ofcom will monitor, assess and enforce compliance with the new telecoms security framework that will be established by the Bill. It will report on compliance to the Secretary of State alongside publishing the annual reports that he mentioned on the state of the telecoms security sector. I want to be absolutely clear: we have had productive conversations with Ofcom already. Ofcom will continue to have the resources it needs. We appreciate that those needs will be affected by the changes that we are bringing in today, and we will agree their precise nature with Ofcom. We will make sure that Ofcom has all the security clearance that it needs to do the job, and all the resources, external or otherwise, to do the job, because this is an important new power.
Ofcom may also play a role in gathering and providing information relevant to the Secretary of State’s assessment of a provider’s compliance with a designated vendor direction, and it may also be directed to gather further information to comply with the requirements specified in a direction. The Bill already enables Ofcom to require information from providers and, in some circumstances, to carry out inspection of the provider’s premises or to view relevant documents. Ofcom’s annual budget, as I say, will be adjusted to take account of the increased costs it will incur due to its enhanced security role.
Let me turn to a couple of issues raised by the hon. Member for Newcastle upon Tyne Central. We will of course be working with local authorities and with networks to minimise any disruption, but we do not anticipate that the decisions that we have made over the past few months will have a direct impact on existing commercial decisions. As the Secretary of State said, we do not expect the two to three-year delay to be extended by what we have said today, but we will keep in close contact with the networks and continue to make sure that we do everything we can to remove the barriers to the roll-out of the networks as far as we possibly can. I do, however, expect companies to do as much as they can to minimise the effects. These are commercial decisions  that have been made by companies over a number of years. We have already seen, as a result of the Government’s approach over the past few months, significant changes to decisions. I welcome the neutral RAN project that my right hon. Friend the Member for Vale of Glamorgan mentioned, as well as a number of others that have been taken by networks that already see important changes to how they procure their networks.